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December 15, 2024
PI Global Investments
Private Equity

RIA Market Trends: Buyouts, and the Increasing Role of Private Equity


The registered investment advisory (RIA) market has been a hotbed of activity, with buyouts and mergers becoming increasingly common. DeVoe & Co.’s latest RIA Deal Book report highlights three key trends that are shaping the industry: the dominance of private equity firms in the market, the attractiveness of mid-market deals, and the growing momentum in “sub-acquisitions.” These trends are not only reshaping the dynamics of wealth management but influencing the strategies of strategic buyers like Bluespring Wealth Partners.

Private equity firms have become a significant force in the RIA market. According to the report, three out of four RIA transactions completed in 2024 thus far were conducted by firms backed by private equity investors. The trend has been realized in some key transactions such as the acquisition of Joslin Capital Advisors by Beacon Pointe Advisors, a RIA consolidator backed by KKR, and the acquisition of Mattioli Woods, a British wealth management specialist, by Pollen Street Capital. The influx of capital from private equity has led to increasing valuations and demand for high-quality RIAs. These trends have the potential to reshape the RIA industry and create firms that are both more nimble and influential in new markets.

Mid-sized deals are particularly attractive in the current market. Eighteen percent of all RIA M&A transactions in the first six months of 2024 were for mid-sized firms worth between $501 million to $1 billion, up from 14 percent at the end of 2023. These firms are often seen as easier to integrate and can provide a moderately sized office in a new market, making them appealing to buyers. The acquisition of Rodgers & Associates Wealth Advisers by Bluespring Wealth Partners is a case in point. The deal, the 27th buyout for Bluespring since 2019, highlights the ongoing RIA buyout trend.

The momentum of sub-acquisitions is another notable development. This “Nesting Doll” approach to scaling up RIA firms involves acquisitions by firms that were previously acquired themselves. Bluespring Wealth Partners employs this strategy by investing in firms in one of two ways: either through acquisition onto their Bluespring platform or as sub-acquisitions for an existing Bluespring Platform firm. This strategy allows them to carve out opportunities in a market squeezed by deep-pocketed PE firms.

The RIA Deal Book report also provides insights into the overall M&A activity in the industry. With 126 transactions announced in the first half of 2024, activity is on track to surpass 2023 levels. The market appears to have settled into a post-pandemic paradigm, with the number of quarterly transactions consistently hovering around 65 since 2020. This stability indicates a healthy M&A market, driven by the need for succession, growth, and scale.

The report also notes the emergence of new buyers in the RIA space, with 83 buyers announcing transactions in the first two quarters of 2024, a 26% increase from the first half of 2023. These new entrants, along with established acquirers, are typically backed by private equity.

Despite the modest growth in overall M&A activity, several sub-trends are keeping things interesting. The proliferation of new buyers, the continued dominance of private equity, and the rise of sub-acquisitions and minority investments are all contributing to a dynamic market environment.

Looking ahead, the lack of succession planning and the widening affordability gap for RIA next-generation leaders to buy out founders are expected to continue driving external sales. While 2025 is currently poised for a slow but steady increase in M&A, various market, economic, or political developments could alter this trajectory.

The report also highlights the trend of RIAs themselves expanding their market share of acquisitions, growing to 35% of deals in 2024, up from 23% in 2021. This growth has come at the expense of consolidators, broker/dealers, insurance companies, and banks, which have lost market share through the first half of the year. Increased RIA market share may indicate positive growth trajectory for the RIA industry overall, but the second half of 2024 will reveal how RIAs manage to position increased scale.

Sub-acquisitions have also reached record levels, accounting for 23% of all transactions and tied with its all-time record level high seen in 2018. This level of activity is projected to remain strong in the second half of the year. Buyers providing their affiliates with acquisition capital, M&A expertise, and sourcing candidates are easily attracting RIAs looking to grow following a sale.

Overall, the RIA market is experiencing significant transformation, driven by the dominance of private equity firms, the attractiveness of mid-market deals, and the growing momentum in sub-acquisitions. Strategic buyers are navigating these trends by employing innovative strategies to carve out opportunities in a competitive landscape. As the industry continues to evolve, it is evident the role of financial advisors and the importance of strategic planning will only grow. The convergence of seller and buyer trends is expected to drive M&A activity through the end of the decade, presenting both challenges and opportunities for firms in the RIA space.





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